China’s car industry is struggling with a shortage of semiconductors used in advanced automotive systems, according to China Daily newspaper citing industry insiders.
The report suggested vehicle production could be disrupted in the coming months due to shortages of semiconductors in the automotive supply chain, with high end cars affected particularly due to their high electronic content.
Go deeper with GlobalData
China Daily cited a local executive at chassis systems supplier Continental as saying companies within the electronics supply chain “are working together to find solutions, but the shortages may continue well into 2021”.
The shortages were blamed on a lack of investment in new capacity due to the COVID-19 pandemic, combined with a stronger than expected rebound in vehicle production in the country following a sharp decline in the first quarter of 2020.
It was unclear whether the China-US trade war had affected the supply of advanced semiconductors to China’s automotive industry after export restrictions were imposed on US manufacturers by their government last September.
Volkswagen was said to be one of the companies considering suspending production of some models in China, particularly high end variants. A representative of SAIC Volkswagen, one of the country’s leading automotive joint ventures, reportedly confirmed key suppliers, including Continental and Bosch, were struggling with “acute shortages” of semiconductors used in electronic stability programme and other electronic control systems.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataVolkswagen Group China said in a statement “to date, customer deliveries have not been affected. But the shortages could lead to potential interruptions in automotive production, with the situation getting more critical as demand has risen due to the full speed recovery of the Chinese market”.
The China Association of Automobile Manufacturers said vehicle sales in the first 11 months of the year exceeded 22m units, down just 3% year on year.
This compared with widely predicted full year declines of up to 20% in the first quarter.
Continental confirmed semiconductor manufacturers had already responded to the unexpected rise in demand with new capacity investments but the additional volumes needed will only be available in six to nine months’ time.
“Therefore, the potential delivery bottlenecks may last into 2021.”
